Correlation Between Bavarian Nordic and Pharvaris

Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and Pharvaris at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bavarian Nordic and Pharvaris into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bavarian Nordic AS and Pharvaris BV, you can compare the effects of market volatilities on Bavarian Nordic and Pharvaris and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bavarian Nordic with a short position of Pharvaris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Pharvaris.

Diversification Opportunities for Bavarian Nordic and Pharvaris

0.62

Correlation Coefficient

Bavarian Nordic  Pharvaris

Poor diversification

The 3 months correlation between Bavarian and Pharvaris is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic AS and Pharvaris BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharvaris BV and Bavarian Nordic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bavarian Nordic AS are associated (or correlated) with Pharvaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharvaris BV has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and Pharvaris go up and down completely randomly.

Pair Corralation between Bavarian Nordic and Pharvaris

Assuming the 90 days horizon Bavarian Nordic is expected to generate 1.46 times less return on investment than Pharvaris. In addition to that, Bavarian Nordic is 1.01 times more volatile than Pharvaris BV. It trades about 0.02 of its total potential returns per unit of risk. Pharvaris BV is currently generating about 0.03 per unit of volatility. If you would invest  1,786  in Pharvaris BV on October 22, 2024 and sell it today you would earn a total of  50.00  from holding Pharvaris BV or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

Bavarian Nordic AS  vs.  Pharvaris BV

Bavarian Nordic AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pharvaris BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharvaris BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bavarian Nordic and Pharvaris

The main advantage of trading using opposite Bavarian Nordic and Pharvaris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic position performs unexpectedly, Pharvaris can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pharvaris will offset losses from the drop in Pharvaris' long position.

The idea behind Bavarian Nordic AS and Pharvaris BV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.